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Reforming Infrastructure : Privatization, Regulation, and Competition

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  • Ioannis N. Kessides
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    Abstract

    Infrastructure industries and services are crucial for generating economic growth, alleviating poverty, and increasing international competitiveness. Safe water is essential for life, and health. Reliable electricity saves businesses and consumers from having to invest in expensive backup systems, or more costly alternatives, and keeps rural women and children from having to spend long hours fetching firewood. Widely available and affordable telecommunications and transportation services can foster grassroots entrepreneurship, and thus are critical to generating employment, and advancing economic development. In most developing and transition economies, private participation in infrastructure, and restructuring have been driven by the high costs, and poor performance of state-owned network utilities. Under state ownership, services were usually under-priced, and making it difficult to expand services. The report indicates that although privatization, competitive restructuring, and regulatory reforms improve infrastructure performance, several issues must be considered and conditions met for these measures to achieve their public interest goals. First, reforms have significantly improved performance, leading to higher investment, productivity, and service coverage and quality. Second, effective regulation-including the setting of adequate tariff levels-is the most critical enabling condition for infrastructure reform. Regulation should clarify property rights, and assure private investors that their investments will not be subject to regulatory opportunism. Third, for privatization to generate widely shared social benefits, infrastructure industries must be thoroughly restructured and able to sustain competition. Thus restructuring, to introduce competition should be done before privatization, and regulation should be in place to assure potential buyers of both competitive, and monopoly elements.

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    Bibliographic Info

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    This book is provided by The World Bank in its series World Bank Publications with number 13525 and published in 2004.

    ISBN: 978-0-8213-5070-6
    Handle: RePEc:wbk:wbpubs:13525

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    Postal: 1818 H Street, N.W., Washington, DC 20433
    Phone: (202) 477-1234
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    Web page: https://openknowledge.worldbank.org
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    Related research

    Keywords: Environment - Environmental Economics & Policies Finance and Financial Sector Development - Banks & Banking Reform Finance and Financial Sector Development - Public & Municipal Finance Infrastructure Economics and Finance - Infrastructure Finance Infrastructure Economics and Finance - Infrastructure Regulation Public Sector Development - Climate Change Policy and Regulation Water Supply and Sanitation - Town Water Supply and Sanitation International Economics and Trade - Competition Policy Private Sector Development - Privatization;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Hugh Rudnick, 1998. "Competitive Markets In Electricity Supply: Assessment Of The South American Experience," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 1(2), pages 189-211.
    2. Louis S. Thompson, 1997. "The Benefits of Separating Rail Infrastructure from Operations," World Bank Other Operational Studies 11562, The World Bank.
    3. Torero, Maximo & Pasco-Font, Alberto, 2001. "The Social Impact of Privatization and the Regulation of Utilities in Peru," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
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    10. J. Stiglitz, 1999. "Whither Reform? Ten Years of the Transition," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 7.
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    13. Nicola Tynan, 1999. "Private Participation in the Rail Sector : Recent Trends," World Bank Other Operational Studies 11472, The World Bank.
    14. Santiago Urbiztondo, 2003. "Renegotiation with Public Utilities in Argentina: analysis and proposal," Working Papers 77, FIEL.
    15. Stern, J., 2000. "Electricity and telecommunications regulatory institutions in small and developing countries," Utilities Policy, Elsevier, vol. 9(3), pages 131-157, September.
    16. Wilson, Wesley W, 1997. "Cost Savings and Productivity in the Railroad Industry," Journal of Regulatory Economics, Springer, vol. 11(1), pages 21-40, January.
    17. Wallsten, S.J., 2000. "Telecommunications Privatization in Developing Countries: The Real Effects of Exclusivity Periods," Papers 99-031, United Nations World Employment Programme-.
    18. Russell Pittman, 2001. "Railway Competition: Options for the Russian Federation," Industrial Organization 0111003, EconWPA.
    19. Anne Yvrande, 2000. "The New British Railways Structure A Transaction Cost Economics Analysis," DRUID Working Papers 00-5, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    20. Eduardo Saavedra, . "Opportunistic Behavior and Legal Disputes in the Chilean Electricity Sector," ILADES-Georgetown University Working Papers inv130, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
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